Emerging market debt ekes out gains on equities; Industrias Unidas sells $200 million notes

By Reshmi Basu and Paul A. Harris

New York, Nov. 6 - Emerging market debt saw a supportive session Monday during quiet trading, assisted by firmness in U.S. core financial markets.

In the primary market, Mexican copper products manufacturer Industrias Unidas, SA de CV placed a $200 million offering of 10-year senior notes (B3 expected/B) at par to yield 11½%.

The deal came in line with price talk of 11½%.

Morgan Stanley was the bookrunner for the Rule 144A/Regulation S deal.

The notes come with five years of call protection.

Moving to Bulgaria, JetFinance International AD launched a €75 million offering of three-year senior unsecured notes at 8½%.

Citigroup is the bookrunner for the Regulation S deal.

Meanwhile two corporates out of China added price guidance.

Retailer Parkson Retail Group Ltd. set price talk for its debut offering of $200 million in five-year senior bullet notes (Ba1/BB) at 8% area.

The notes will be guaranteed by offshore subsidiaries.

JP Morgan is the bookrunner for the Regulation S deal.

Also, Xinhua Finance Ltd. set price talk for a $100 million offering of five-year senior unsecured notes (B2/B+) at 10¼% to 10½%.

The notes are non-callable for three years.

ABN Amro is the bookrunner for the Regulation S deal.

The deal will carry a make-whole call option as well as an equity clawback provision.

The issuer's principal activity is the provision of China-specific indexes, financial news feeds, credit ratings and investor relations.

Adding to the pipeline, Poland's Getin Bank SA set initial price talk for a $100 to $150 million offering of two-year bonds (Ba2//BB) at 7 ½% to 7 5/8%.

Barclays Capital is the bookrunner for the Regulation S transaction

EM tad higher

Emerging markets opened the week with a positive tone, as U.S. stocks posted gains on the back of robust takeover activity. That fueled investors' appetites amid an already somewhat bullish market, noted a source.

Nonetheless, the session in emerging markets was described as quiet.

"Typical Monday-like volumes," observed a trader, who added: "The market is doing well."

In general, emerging market debt has witnessed a run up on the prospects of lower inflation coupled with a moderately paced expansion in the U.S. economy.

Also adding support, global financial markets have seen low volatility, which has stirred up investors' appetite for riskier assets, noted an analyst.

As in recent sessions, smaller credits saw tighter spreads. Panama and Uruguay were the day's out-performers.

Meanwhile the Brazilian bond due 2040 added 0.05 to 131.80 bid, 131.85 offered. The Turkish bond due 2030 rose 0.25 to 150.75 bid, 151.25 offered. The Russian bond due 2030 gained 0.25 to 111.625 bid, 112 offered.

In other news, oil rose above $60 per barrel, incited by violence in Nigeria. That also helped give support to oil credits such as Ecuador and Venezuela, according to a trader.

In trading, the Ecuadorian bond due 2030 gained one point to 108.75 bid, 109.25 offered. The Venezuelan bond due 2027 added 0.45 to 124.25 bid, 124.50 offered.

Nonetheless, one market source noted that not everything is ideal in emerging markets. He said he was concerned about how tight spreads are. The asset class is within striking distance of piercing its historical tight, which it achieved in early May.

Still, sources have noted that, short of a recession, there are no triggers that will derail the market's momentum this year since technicals are in good shape.

One source observed that the Street is making efforts to avoid being short until year-end.

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